06 July 2020

Will Sunak save our sandwiches?

This afternoon, the upmarket sandwich chain Pret A Manger announced the permanent closure of 30 stores and the loss of 1,000 jobs across its business. In more normal trading conditions, this announcement would rightly have rung alarm bells. But in this post-Covid retail battlefield, Pret’s stale sandwiches appeared no more than a garnish topping off a list of extraordinary high street casualties. Last week alone, the Restaurant Group, the Casual Dining Group and SSP Group, each major players in the hospitality sectors and owners of well-loved eateries, announced that they would cut almost 10,000 jobs between them. This comes hard on the heels of the fate that has befallen other household names such as Byron Burgers, Carluccio’s, and Le Pain Quotidien over recent months.

The protracted lockdown, the loss of international tourist trade, and stringent social distancing guidelines have all conspired to cut demand. Some businesses have managed to tighten their belts and slash their cost base since March to stave off administration. But, sadly, despite their best efforts to stay afloat, since the start of 2020, 2,630 stores have closed due to retailers collapsing into administration, which has placed 55,976 jobs at risk, according to the Centre for Retail Research. A few businesses have managed to re-emerge, Phoenix-like, through the controversial process of pre-pack administration – a process that 2020 is likely to render even more suspect.

Many will argue that last weekend’s “Super Saturday”, which resulted in almost a 30 per cent spike in footfall in central London and across regional city centres, is the first ray of sunshine for businesses teetering on the brink. But only time will tell how soon the public will feel confident about returning to Britain’s shopping centres and retail parks and, crucially, whether this will be too little, too late, for businesses desperate for custom and cash right now.

In the wake of this tsunami of mass job losses, store closures, and reduced consumer demand, it is little wonder restaurateurs and retailers are focused on the Chancellor’s impending mini-Budget. An open letter sent this week and signed by around 120 hospitality and tourism company heads, urges the Government to support the sector and stimulate demand by extending the furlough scheme and business rates holiday for hospitality businesses, reducing VAT to 5 per cent for tourism services and doubling the employer National Insurance contributions threshold.

The Government has already taken extraordinary and unprecedented peacetime steps to support businesses and the economy during this cataclysm. All eyes will now be on Rishi Sunak to come up with a package as imaginative and comprehensive as were his measures at the start of the Covid crisis. If he succeeds, there will be many more Britons ready to enrol in the rapidly growing Sunak fan club.